‘Oversupply’: Australia Post outlets to close despite half-year profit of $33.6m

Australia Post is running a “two-speed” business and some of its stores may need to close, its chief executive Paul Graham has warned, as continued losses in the service’s letter division weighed down profits in the final six months of 2023.

Releasing half-year results on Friday, Australia Post reported a half-year profit of $33.6m, up from $10m recorded over the same period in 2022.

The result was buoyed by the delivery of a record number of parcels, which climbed to almost 100 million over summer, but the service’s letter business continued to haemorrhage profits, reporting a loss of $182m, as the number of letters sent fell 12 per cent in as many months.

Had it not been for a recent 10c increase in the price of stamps that took effect in January 2023, the division would have reported a further $90m reduction in revenue, Australia Post said.

Come April 3, stamp prices are set to be hiked again by as much as 25 per cent, increasing the price of an ordinary small letter stamp from $1.20 to $1.50 after the consumer watchdog, the Australian Competition and Consumer Commission, indicated it would not oppose the move.

A major overhaul of Australia Post, announced by the federal government in December, will slash the frequency of letter deliveries in half, with posties instead focusing their efforts on bolstering the more lucrative parcel delivery business.

But as customer visitation dwindled and the amount spent in stores slipped, Australia Post said there was a “significant oversupply” of retail outlets, which number 4271.

Mr Graham said the service’s continued viability would be tested unless further changes were introduced.

“Despite the green shoots, there are still fundamental structural challenges confronting Australia Post, as letters use continues to decline and fewer customers utilise our retail network,” Mr Graham said.

Under strict regulatory conditions governing the public entity’s operations, it must have a retail outlet within 2.5 kilometres of every citizen in metropolitan areas, a requirement Mr Graham is seeking to be axed.

“The new delivery model we are trialling will help address the decline in our letters business, but our outsized retail network will need to be addressed,” he said.